Global regulators want to shake up how corporate audit rules are written to curb the influence of accountants and avoid any conflict of interest.
Audit rules are currently written under the umbrella of the International Federation of Accountants (IFAC), a global body that represents a profession dominated by the "Big Four" - PwC, Deloitte, KPMG and EY - which also check the books of nearly all blue chip companies globally.
Regulators now want audit rulemakers who are independent of the accounting industry, and issued a paper for public consultation on Thursday that set out options for change.
They aim to replicate a similar change made to accounting rules two decades ago that is now the benchmark for book-keeping in over 100 countries, and aim to have it in place by 2020.
"The status quo is definitely not an option," Gerben Everts, who chairs the group of global regulators that monitors IFAC, told Reuters. "We are the driving force for this change."
"I am not saying the current standards are weak or should not be complied with, but I think there is a lot of potential for stronger standards in the audit world with less flexibility, less optionality," said Everts, who is also a board member at Dutch markets watchdog AFM.
A new, independent body would need phasing in over about a year and half to be up and running in 2020. It would include views from investors, companies, regulators and analysts.
There have already been some moves to bolster broader interests in IFAC rulemaking, such as setting up the Public Interest Oversight Board, but Everts views these as a "temporary situation".
"The standards as they are will remain in place, but we need to make sure that for revision of standards and new standards we have a broader group of people independent from the profession, with the technical know-how and strategic focus," he said.
IFAC said regular reviews of the standard setting process are in the public interest, and the current system already has many of the elements called for by the monitoring group.
"We do, however, have reservations about the lack of an evidence-based case for radical change, and the fact that key issues such as governance structure, funding model and risk assessment are deferred," IFAC said in a statement.
The consultation will end in February and the monitoring group will publish a final proposal next summer, said Everts.
The group will work on a separate paper on how the new body would be funded.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)